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Archive for May, 2011

BEST GOLD BARGAIN IN 2011?

BUYING GOLD/SILVER, GOLD & SILVER   No comments yet

Most physical gold buyers don’t expect to see the words “bargain gold” and “2011″ in the same sentence considering the last ten years has seen nothing but major gains for yellow metal.  We have said many times at The Prospector Site the name of trading dollars for gold is to pay as close to spot as possible, certainly if you are new to buying gold.  But the challenge today is premiums on physical gold, and silver too, are rising and to be honest I don’t see premiums reversing anytime soon.  Today we look at bargain gold in 2011.

I spent some time researching bargain gold and have to admit my findings are surprising and contradicting.  I, like many of you, always believed buying volume was the secret to buying closest to spot price but this is not always the case.  Below you’ll see how buying a large mass of metal doesn’t necessary translate into a savings .  Combine this with the difficulty when selling and it makes a gold holder rethink bargains. After all, how many gold buyers have $50k to plop down on a kilo gold bar?  Let’s break it down.

PHYSICAL GOLD: Currently spot gold price is $1536 per ounce.  Unfortunately, you can’t find physical gold at spot so below is spot plus premium prices of several physical gold types.

AMERICAN GOLD EAGLE : 1 OZ COIN:  5% over spot at $1612 per coin.

AMERICAN GOLD EAGLE:  1/2 OZ. COIN:  10% over spot at $845 per coin.

AMERICAN GOLD EAGLE:  1/4 OZ COIN:  12% over spot at $430 per coin.

AMERICAN GOLD EAGLE   1/10 OZ COIN: 15% over spot at $176 per coin.

GOLD BAR 1 OZ BAR:  2.5% over spot at $1575 per bar.

GOLD BAR 10 OZ BAR: 3.5% over spot at $15,898 per bar.

GOLD BAR 32.15 OZ KILO BAR: 3.3% over spot at $51,012 per bar.

What surprises me the most is the best bang for the buck is the 1 ounce gold bar with a premium of only 2.5% over spot price.  The larger bars charge around 1% more in return taking more dollars to buy and harder to liquidate down the road.  The fractional (less than one ounce coins) coins stayed true to expectations by gradually increasing in premium the smaller the coin.  Just for comparison most physical silver sells around 8% to 11% over spot but is increasing.

But the premium side of gold is always passed to new buyer, right?

Absolutely not and here is why.  Rethink everything that you believe as true pertaining to gold and silver.  Wipe the stereotype of a crusty old man collecting coins and replace with a mental picture of a teacher, butcher, nurse, mechanic, doctor, student, and letter carrier.  This new gold buyer cares nothing about rarity, design, or  collectible value but is all about trading dollars for a safe haven like gold and silver.  This new type buyer greatly affects metal premium because they are not willing to pay 40% over spot for something collectible if the same amount of gold can be bought for 5% over spot.  The fact is the number of collector type buyers are declining while the number of safe haven buyers are multiplying.  Don’t assume above normal premiums can be passed to new buyers.

NEWS WORTHY:

NEW YORK (CNNMoney) “Home prices: ‘Double-dip’ confirmed”

“Home prices continue on their downward spiral with no relief in sight,” said David Blitzer, spokesman for Standard and Poor’s.  Prices are now down 32.7% from their peak set five years ago.  Read it here.

NEWS WORTHY:

NEW YORK (MarketWatch) — Another fabulous Friday for gold has the bugs bugalooing.Gold signaling hyperinflation?

Commentary: Gold bugs cite lack of faith in paper money.

Sinclair predicts hyperinflation — in language that I won’t even try to get past MarketWatch’s editors!  Read it here.

NEWS WORTHY:

BULLION VAULT: CASEY RESEARCH. Why Today’s Gold Bull Market Dwarfs The Last One – 27 May 2011

“Today, few countries prohibit gold ownership, and a far higher percentage of the world’s population has transitioned out of poverty.   Read it here.

FAIR PRICES IN GOLD & SILVER (10:00 am MDT)

  • ONE OUNCE SILVER BULLION:                 $43.21

  • ONE OUNCE SILVER ROUND:                     $40.56

  • ONE OUNCE GOLD BULLION:                     $1613

  • ONE OUNCE GOLD BAR:                               $1574


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DO YOU NEED A PRECIOUS METAL ADVISOR?

BUYING GOLD/SILVER   No comments yet

Let’s break it down.  We have financial advisors, marriage counselors, guidance counselors, shrinks, manicurist, concierge, yard doctors, wellness centers, personal trainers, doggie walkers, daycare centers, grief counselors, and finally, Feng Shui consultants.  So let me ask, in this day when we don’t have to think for ourselves why not use an advisor to help when buying precious metal?  A bigger question is in this day of self-reliance why put your financial future in the hands of a stranger? Today I will break down if you need an advisor to help with trading your dollars for gold or silver.

Before we go on, God Bless those that have served us all to protect the freedoms of this great country.  We Thank You and your families this Memorial Day!


Your #1 asset:

A life long buddy called up the other day complimenting The Prospector Site but mentioned we are not “defining” enough.  He is exactly correct in his observation because our goal is to provide knowledge to help you formulate the opinion.  That doesn’t mean we won’t throw our two cents in occasionally but for the most part every reader is capable of understanding the dynamics behind gold and silver ownership.  Another problem with someone telling you when and what to buy is how will you know when or what to sell?  The fact is no one will watch after your families money like you so my pick for your precious metal advisor is, you guessed it, you.

What if I mess up?

Welcome to the club my friend.  Messing up is all part of the learning curve.  I have been candid about a time I wanted to buy gold American Eagles but let  my gold representative sway me in another direction.  The lesson cost me several thousand dollars but I learned to make a plan and stick with it willing to live with the outcome.  If you are one of the thousands nervously balancing on the fence to buy or not let me say this.  It will be a very rare situation when a person buys gold or silver as close to spot as possible and yet ends up making a mistake.  The mess ups in the past usually pertain to futures, leverage, and rare coin purchases.  I’m not saying these types don’t have a place but they certainly are not for the inexperienced precious metal buyer.

Information age:

Today’s information age is nothing short of amazing by way of advancement of internet services.  From planting a garden to planting a new heart nearly every profession known to man is taking advantage of online information.  Gold and silver investing (or should I say saving) is at the finger tips of every person willing to put time into knowledge.  Sure there is contradicting information but this will be the case even if you interview several financial advisors.  It comes back to opinion and the best opinion to have as a gold investor is one of knowledge.  After a short video I will give two simple questions anyone can ask to shake out not so good advice when buying gold or silver.  Please don’t be afraid to ask questions, it’s your money being spent.

Below is a perfect example of good buying information for gold and silver.  The cost to you is your time.

QUESTION #1:

How much will the precious metal broker, coin shop, etc pay if you turned around and sold the metal back to them?  This will show the “premium” cost right from start and before you buy.  Please don’t assume the premium cost of the coin will transfer when you decide to sell someday.

QUESTION #2:

Why should you buy this particular coin, bullion, or round over any other?  Research will pay with this question and knowledge will allow you to smell a scam a mile away.


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Q & A FOR THE WEEK

BUYING GOLD/SILVER, GOLD & SILVER   No comments yet

One of the highlights of founding The Prospector Site is responding to questions as they relate to gold and silver.  I certainly will not claim to have all the answers but most questions are simply asking for a little validation of what many already know the answer.  Today we look at a few more questions and my expectations are if one person is willing to ask the question many more are asking it as well.

QUESTION #1: Since silver has dropped this month would you still pick silver over gold?

This is really one of those ice cream or cake questions.  I personally continue to buy silver nearly every week or two regardless of price.  I was taken back by the manipulation and drop you refer to but I still feel, very soon, physical silver demand will prevail and manipulation will be a long shot at best.  Gold is the work horse of precious metals and all metal holders should hold yellow metal.  My concern is gold will soon price itself to the point only big money can play.  To answer your question “yes” I still prefer silver mostly because its price will attract more buyers and more demand means higher priced silver.

QUESTION #2:  You have mentioned many stocks are over valued but I don’t see how this relates to gold and silver.  Can you explain?

Yep, would love to.  Many stocks are at a critical point today because billions of printed dollars have been injected into stock markets world-wide.  This artificial stimulation makes it nearly impossible to prove true value of any corporation.  In fact, many corporations simply follow the flow of government money into whatever sector is pumping government milk by way of tax payer’s breasts.  Think green movement.

Here is how gold and silver play into to this artificial stock value.  As I write this, millions of concerned citizens are pressuring represented political leaders to rein in spending and ridiculous debt.  I doubt new spending, by way of debt, will stop but it may certainly slow the money moving into corporations which could lead to many stock holders moving to more stable assets like precious metal.  Combine this with the fact many “boomers” are coming of age looking for solid, stable, and trusting forms of savings and investing that gold/silver offer.

The stock market today really has me, and others, concerned.  The good news for metal holders is this correction in the stock market, just like today’s real estate, will create a huge buying opportunity by trading gold into discounted stock.  There is no doubt many corporations will profit well even if the overall market declines simply because they are positioned in necessity markets.

QUESTION #3:  Please give more information related to half ounce silver coins.  Are these good investments?

Someone asked a question recently about a 1/2 ounce silver coin if I remember correctly and at that time I knew little about the offering.  Yes they are available in fact I tried to by some this week but I didn’t for one reason, sales tax.  You see half ounce silver coins are not legal tender at least not the ones I’ve seen, so in my state I would have to pay 6% sales tax.  Some states charge sales tax on silver and gold rounds, bars, etc but not legal tender coins like American Silver Eagles or Canadian Maples.

If you are in a state that doesn’t require sales tax added to silver rounds by all means trade dollars for half ounce silver coins.  As silver increase, as it certainly will, cheap silver will have the highest demand at least in my opinion.  Try to stay away from additional premium costs like we commonly see with fractional gold coins ( fractional coins are coins less than one ounce).

QUESTION #4:  Buying gold seems like a cheesy way to invest best served to those that lie in wait for the end of the world.

Not sure if this is a question by I would love to respond.  I completely understand your thinking but this is not the case with most metal investors.  Most of us that own gold and silver want our independence not relying on programs, governments, or anyone else for financial or physical survival.  This certainly doesn’t mean most holders are not rooted in faith or conviction since most gold and silver holders have deep moral and biblical beliefs.  Not sure if this makes us cheesy?

NEWS WORTHY:

NEWS BLAZE: “US Deficit Continues to Put Upward Pressure on Gold”

“Firstly, let me get something out of the way. The United States is a bigger economic basket case than Europe. The entire European debt crisis is way overblown. Places like Portugal, Ireland and Greece are tiny. They would be the equivalent of Rhode Island and Alabama going under; that wouldn’t exactly take down the U.S. economy. In addition, Europe has such a bloated social welfare system that it can easily cut these expenditures. Also, Europeans, unlike Americans, are willing to pay taxes for government services. However, Europe’s policy of printing money to take care of some of these problems is another positive factor for gold.”  Read the entire article here.

NEWS WORTHY:

“Gullible Consumers May Get Gored on Gold Price: Sellers Beware”

FORT LAUDERDALE, Fla., Feb. 18, 2011 /PRNewswire/ — As cash-strapped consumers sell their gold to pay for everyday necessities, complaints against gold dealers have risen. The biggest offenders according to a recent tally on the Better Business Bureau’s website, BBB.org, are cash for gold buying companies advertising heavily to buy unwanted gold jewelry on cable television channels. One company had 369 complaints in the previous 36 months. Another had 197. The complaints range from pricing discrepancies and misleading advertising to customer service issues and claims for lost shipments.  Read it here.

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THE PROBLEM WITH GOLD & SILVER PREDICTIONS

BUYING GOLD/SILVER, GOLD & SILVER, GOLD AND MONEY   No comments yet

Let me first say this is meant to be light-hearted and I’m certainly not picking on anyone.  Today we prove why attempting to predict future movements of a commodity or investment can be challenging to say the least.  If you read closely you’ve noticed The Prospector Site rarely makes predictions but will point out trends.  This may sound wimpy but the fact is we deal only in facts not just my opinion.  Our goal is to inform, through knowledge, individuals like yourself to make comfortable and confident opinion of precious metals.  Today we look at results from those brave enough to make gold, silver, and other  predictions.

PREDICTION #1: 1929 Stock Market

Irving Fisher was a noted 20th century economist. No less an authority than Milton Friedman called him “the greatest economist the United States has ever produced,” and many of his contributions to economics, such as the Fisher equation, the Fisher hypothesis and the Fisher separation theorem are cited by economists to this day.

Yet despite his intellect, he made one statement in 1929 that destroyed his credibility for the rest of his life.

Three days before the Wall Street Crash of that year, he claimed that, ” stocks have reached what looks like a permanently high plateau.” When he was disproved 72 hours later, he tried to get out from under the statement, but months of putting a positive spin on developments only further eroded his reputation. He died in 1947, but a renewed interest in neoclassical economics in the 1950s caused a re-evaluation of his work and a rehabilitation of his name.

PREDICTION #2: REAL ESTATE MAY, 2007

This YouTube video is nothing short of amazing to watch as a panel of four predict how residential real estate will trend over the next year (2008).  The only one that got it right is Peter Schiff as he is ridiculed for saying no documentation loans, no down payment, and speculation will bring a severe correction to real estate.   Sorry for the poor quality but worth watching it here.

PREDICTION #3: GOLD & SILVER

Another YouTube video this time with Mike Maloney speaking on silver’s behalf back in early 2010.  I urge you to take a few minutes and watch not only the predictions of a silver rise but why. At the time of Mike’s interview, silver was selling at $16 per ounce and 1/65th the value of gold.  Just for the record silver is over $37 and around 1/40th the value of gold.  Very interesting how Mike comments how $1500 dollar silver will stem from fear and mania but not stay at $1500 long.  See it all for yourself.

So the point of all this is making accurate predictions is tough even for the so called experts since emotion sometimes overrides fact. I urge you to continue to read sites like ours, Mikes, and others that follow factual movements of current trends as they relate to precious metals.  The what and when to buy or sell is important and the ultimate timing should be yours with the help of a few that follow gold and silver very closely.  As always, thank for reading The Prospector Site.

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GOLD AND SILVER BREAKS THE BARRIER OF "TRADITION"

BUYING GOLD/SILVER, GOLD & SILVER, GOLD AND MONEY   No comments yet

I’m a nontraditional type guy and betting since you’re reading this you are too.  Surely this is what attracts many of us to the “lone wolf” appeal of gold and silver.  We have mentioned many times that even though precious metal ownership is increasing many experts feel less than 2% actually own gold.  Traditional investment avenues have never appealed to me and the thought of sending money from every paycheck to some yahoo simply does not make sense.  I figure I can screw it up just as easy as they can and without a fee attached.  But lately the nontraditional way of living has pulled ahead like a long shot derby winner as we see gold holders standing tall while other investments begin to waiver.  Today we look into the nontraditional aspects of gold and silver.

The Prospector Site recently posted a full article on Dave Ramsey, see it here , in rebuttal to Dave’s stance on how gold has historically performed worse compared to traditional stock type investing.  Dave is completely correct on this fact but what is not mentioned is gold is not, and should not, be perceived merely as an investment.  In the post we pointed out for years private gold ownership in the U.S. was illegal all while traditional markets traded freely.  For years gold was considered a currency so twenty bucks in dollars traded straight across for a $20 gold piece (St. Gauden $20 gold coin that now is worth $1600 by the way).  So gold went from a currency, then confiscated, then back to private ownership.  To compare gold historically with stocks or other traditional investments is ridiculous at best.

Gold was never intended to by an investment like so many other types that pay dividends or provide passive income.  Gold has always been a store of wealth which means it floats along the river of inflation ready to dock whenever you feel like trading back metal for dollars.  The bright spot is this transport of value stays in check with inflated dollars thus allowing you to buy the same amount of whatever as before.  Please do not invest another hard-earned dollar until you understand this paragraph, regardless if traditional or nontraditional.

But these are extraordinary times and in all likelihood holders of silver and gold will amass fortunes in dollars at least if the volume of dollars continues to flood our financial system. The catch is masses of dollars might be what it takes to buy what less dollars used to.  If you have followed Mike Maloney’s asset cycles then you realize this perfect storm for metal holders is truly a once in a lifetime opportunity to amass major wealth.   Think about how real estate is in such decline all while precious metals are at or above record values.  If you want to know more about wealth cycles check it out below.

NEWS WORTHY:

MARKETWATCH: “People plan to work into their 70s or later”

SAN FRANCISCO (MarketWatch) — Almost four in 10 workers said they’ll work long past the normal retirement age, if they even retire at all, and a growing number of people said the recession will force them to work longer in life, a new survey finds.  Read more here

NEWSWORTHY:

CNN MONEY: “Many don’t have $2,000 for a rainy day”

NEW YORK (CNNMoney) — Half of Americans say they aren’t prepared for a minor financial emergency.

Roughly 28% said they “certainly” would not be able to cope with an unexpected $2,000 bill if they had to come up with the money in 30 days, and another 22% said they “probably” would not be to able to cope. Wish it was a longer article but you can read it here.

NEWS WORTHY:

CBS SF: “Armed Man Robs $10K From Marin Precious Metals Dealer”

MILL VALLEY (CBS SF) — A man stole more than $10,000 in cash this morning from a Mill Valley precious metals dealer, prompting police from several jurisdictions to conduct an extensive search for the suspect that ended unsuccessfully, a Mill Valley police sergeant said.  See it here.

FAIR PRICES OF GOLD & SILVER (8:30am MDT)

  • ONE OUNCE SILVER BULLION:                          $42.98

  • ONE OUNCE SILVER ROUND:                              $40.33

  • ONE OUNCE GOLD BULLION:                              $1611

  • ONE OUNCE GOLD BAR:                                        $1573

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NOT SO GOLDEN YEARS FOR SOME SENIORS

BUYING GOLD/SILVER, GOLD & SILVER, GOLD AND MONEY   No comments yet

It’s painful to write a post like the one you are about to read.  The sad truth is many of our parents and grandparents are losing a budget battle that in all likelihood is worsening.   Work hard your whole life, check, raise a family, check, pay Social Security entire working life, check, then end up living your golden years out by living off worthless dollars.  The part of this that haunts me is a small savings in gold could have prevented the anguish many of our seniors are living with.  Today we look at the not so golden years for some seniors.

Bring up the word COLA and watch many elderly on fixed incomes just shake their heads. For those unfamiliar COLA stands for Social Security Cost of Living Adjustment but the problem is while COLA has risen 31% the cost of senior expenses has jumped 73%.  The last two years has seen no increase, or COLA,  just as food, medicine, and housing costs jump an average of 32%.  The fact is senior’s buying power is decreasing at an alarming rate.  Many of these folks no longer have an option to earn extra income thus reliant on declining dollars as the sole source of survival.

Many middle-aged and still part of the work force have questioned if Social Security will be there for them during retirement years. My opinion is it will but have so little value few will make trying to rely on it as a viable source of income.  Debased dollars will simply not stretch far enough to make ends meet for most.  The Prospector Site will continue to provide proof why trading dollars for gold and silver can create a life of self-reliance and financial freedom.  For most, the goal is not to amass a fortune but keep enough wealth to sustain quality of life and independence.

The lesson learned is that a life of government dependence is a future in doubt. One of the many benefits of gold ownership is the freedom, peace of mind, and self-reliance that comes from a true savings of real money.  Many of our seniors are realizing this the hard way but the fact is you don’t have to.  Please take a hard look at trading dollars for gold or silver while they are still affordably priced.  Below is an example of how those reliant on monthly social security checks are finding how inflation is robbing many of the basic necessities needed to survive.

WASHINGTON, May 19, 2011 /PRNewswire/“2011 Annual Survey of Senior Costs Finds Expenses Have Increased More Than Twice as Fast as Social Security COLA”

“For many years, seniors have watched helplessly as the value of their benefits has eroded. Those losses have added up, and millions of seniors – among our most vulnerable citizens – are barely able to scrape by today,” said Larry Hyland, chairman of The Senior Citizens League. “To put it in perspective, for every $100 worth of expenses seniors could afford in 2000, they can afford just $68 today.”

“A majority of the 37 million Americans aged 65 and over who receive a Social Security check depend on it for at least 50 percent of their total income, and one in three beneficiaries rely on it for 90 percent or more of their total income.”

NEWS WORTHY:

“Real-estate nightmare looms for retirees” By Robert Powell, MarketWatch

BOSTON (MarketWatch) — Five short years ago, many learned men and women warned Americans against thinking that rising home prices would eliminate or lessen the need for them to save for retirement. Institutions and advisers alike advised people against relying on the equity in their homes to finance part or even all of their consumption needs in retirement.

Today, that’s no longer the case. In fact, we now have almost the opposite situation. With home prices falling for nearly five years, many Americans must consider what to do with their homes should prices continue to collapse and the equity in their homes — if they are still lucky enough to have any — disappears completely.  Please read the rest here.

NEWS WORTHY:

Getting Gold, Alternatives Into 401(k) Plans

April 12, 2011

Most 401(k) investors don’t have access to gold, commodities and other alternative investments, according to John Ameriks, principal at mutual-fund giant Vanguard Group. Still, he says employees can push for these options. Jonathan Burton reports.  Watch it here.

NEWS WORTHY:

Why does explosive silver behave so differently from far steadier gold?

The silver market is still reeling from its fall from $50 to $34 over a very short time. The move was driven by at least one investor selling around 1,000 tonnes of silver over a two week period. Silver had climbed quickly from around $25. The charts supported a rise to $29, but as silver went higher, it climbed out of technical range into new territory. All the time thereafter it was vulnerable to a selloff back to support around that level. Many felt it could easily fall to $20 before recovering, but it bounced off $32 and has been consolidating above $34 since then. The selling then stopped and buying started, but the consolidation at this level indicates that the market has to get used to these prices for a while before they establish a ‘floor’ that permits cautious buyers to re-enter the market again.  Read the rest here.

FAIR PRICES IN GOLD & SILVER (9:00am MDT)

  • ONE OUNCE SILVER BULLION:                    $41.97

  • ONE OUNCE SILVER ROUND:                        $39.32

  • ONE OUNCE GOLD BULLION:                        $1597

  • ONE OUNCE GOLD BAR:                                  $1558

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HOT SUMMER GOLD!!

BUYING GOLD/SILVER, GOLD & SILVER   No comments yet

I grew up in the San Joaquin Valley just outside a small farming community in California.  You talk about hot summers, the only relief from the heat came from afternoon dips in the few rivers flowing with precious farm water.  Traditionally summer is not good for gold but one of the most accurate gold experts is calling for a movement in gold unseen in nearly thirty years.  You may find yourself looking for the number of your gold broker after hearing what James Turk has to say about summer gold. Today we look at summer gold 2011.

The Prospector Site is constantly attempting to bring unbiased precious metal validation to both new and experienced gold buyers.   No one knows for sure how precious metal, stocks, or real estate will perform over the remaining months of 2011 but the trend looks best for gold and silver according to experts like James Turk.  Feel free to skip below the You Tube video to see what Mr. Turk predicts for summer gold.  If you care to learn more about gold, silver, and Mr. Turk be sure to watch the video below.

Recently Mr. Turk had nice things to say about summer gold that is sure to put smiley faces on all gold holder’s faces. James Turk’s recent interview on summer gold was on King World News with a few highlights listed below.

KING WORLD NEWS – James Turk Interview: “I think this summer is going to surprise a lot of people. Many are thinking this is going to be another typical summer where precious metals prices are weak, but it doesn’t always happen that way Eric. Sentiment is set up this way because it has been 29 years since we have seen a big rally in the summer. Back in 1982, the Mexican debt default lit a fire under the precious metals and the gold price nearly doubled over the next six months.”

All one has to do is look at how much money the US government is borrowing and what they intend to borrow in the future to meet their spending needs to clearly understand that the Federal Reserve is going to keep buying the US government’s paper. This is the point that John Williams made clear in his KWN interview.

The extraordinary rally in the summer of 1982 began in the second week of June and by the first week of September gold has risen 50%. That’s a 50% move in less than three months!”

People should be saying to themselves that they don’t care what the gold price is doing today, if this is the day of the month they are scheduled to buy, then buy it. Continue on with their dollar cost averaging plan and the same goes for silver.

Thanks to Mr. Turk for this information.  I appreciate what he says about buying when scheduled not trying to time the market. Many, maybe most, new gold and silver buyers try to time a dip not realizing the most important aspect of gold ownership is the protection that only comes from real money.  I often refer to precious metal as an insurance since this is exactly what trading dollars for gold will offer.  Although many will make fortunes in gold and silver its primary purpose is preservation.

NEWS WORTHY:

MARKETWATCH: “Why Bernanke will be forced to institute QE3″

“Now, we suspect that the difficulty the Fed has had in meaningfully “reviving” the economy so far could indicate that the state of the pool of real savings or the pool of real funding is in trouble. This means that even if the growth momentum of lending does currently show some strengthening … it is highly unlikely that, with the weakening of bubble activities on account of the Fed’s freezing its balance sheet, commercial banks will pursue an aggressive expansion of credit out of thin air. Also, it is quite likely that with the freezing of the balance sheet, Treasuries will come under pressure, and the growth momentum of banks’ holdings of Treasuries will weaken. This in turn will exert downward pressure on the growth momentum of total bank lending, which includes lending to the government.

“The consequence of taking their foot off the money pedal will lead to higher unemployment and I do not think this is politically acceptable to the Fed or to the Administration. I think they will institute a new round of quantitative easing (QE3) because politicians will demand that the Fed “do something.” Which is, of course, the worst thing they could do. It will lead to more “bubble” activities and higher price inflation. See Will Fed Insist on Trying to Ignite Unhelpful Wealth Effect?”  Read the rest here.

NEWS WORTHY:

FORBES: KITCO NEWS: “Silver Price to Move Forward Despite Current Volatility: Silver Standard CEO”

“I think we’ve seen a fairly aggressive run-up in silver price and I think there’s a bit of the market drawing its breath, but at the end of the day there’s still something like 60 odd trillion in cash looking for an investment home,” Smith said.

“So I think there’s a lot of bias for industrial use to the upside and if you look at the investment side of it, you still have a strong piece that says that the world is not in a good stasis now, which will support the investment nature in silver,” Smith said.  Read it here.

NEWS WORTHY:

BLANCHARD CO: ” Rising gold and silver prices “positive for the coin market”

“And it’s a mixed answer and an important answer: We have two big winds blowing. The first wind is positive for the coin market, positive for us, and that’s the gold and silver wind. The U.S. debt is in hockey-stick mode – to the upside. It’s ridiculous. They’re going to vote to raise the debt ceiling above $14 trillion. … The dollar is a total fiat currency now.

“On the other side, we’ve got a negative wind blowing against us, and that wind is the economy. Since the financial crisis of 2008 … the economy, unemployment’s high, not all businesses are doing that well. I have some friends that call me and say, ‘I can’t buy coins; my business is down 70 percent.’ … Economy sucks, OK, and that’s a wind blowing against us. So we have a big wind pushing us, a big wind blowing us back. And so you have a mixed coin market.” Read the rest here.

FAIR PRICES IN GOLD & SILVER (10:15am MDT)

  • ONE OUNCE SILVER BULLION:                     $42.72

  • ONE OUNCE SILVER ROUND:                         $40.07

  • ONE OUNCE GOLD BULLION:                         $1607

  • ONE OUNCE GOLD BAR:                                   $1568

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U.S. DOLLAR, THE BEST OF THE WORST

BUYING GOLD/SILVER, GOLD & SILVER, GOLD AND MONEY   No comments yet

As I write this money is flowing into the dollar like August sweet tea.  The truth is the U.S. Dollar is no different from picking the best of the worst moments after a 2:00 am last call.  If you are new to The Prospector Site you may be asking why we spend so much time discussing things like dollars when gold and silver are the focus?  It’s just not that simple seeing how issues like dollars, deficits, debt, etc. all affect how gold and silver react.  Today we look at the best of the worst, the US Dollar.

Below is a common chart showing the declining path of the US Dollar since 1900.


This chart shows exactly how bad dollars have performed so why is it investors are pouring fresh money into a currency obviously in decline.  The news of late is very bad for euro investors so could this be why the dollar has risen by proof of the dollar index, at least recently?  Does the same dollar investor realize gold has appreciated 8000% since 1900?  The stock market, over the same period, has even out performed gold so why is money pouring into the least effective way to save, the dollar?

Could it be citizens around the world are more in love with the US Dollar perception than actual buying power? I realize everything is worth what anyone is willing to pay but it’s starting to sound like dollars, like many other currencies, are manipulated and debased to a point hardly worth holding.  How long will it be until foreign debt holders make obvious trades away from the dollar leaving dollar savers in peril.  What will the exodus from the dollar, into safe investments like gold, do for prices of physical metal?  Most Americans barely keep above financial water now so how will they find dollars to trade for gold or silver?

The U.S. Federal Reserve Bank will ride the dollar horse till it drops leaving those with dollar based savings holding pennies on the dollar.  Poor souls with fixed incomes by way of pensions or social security will also find debased, devalued, dollars buying a fraction compared to days of old.  Today’s dollars may be the best of the worst but in my opinion they are not worth the paper not printed on.

ADVERSE REACTIONS:  For sometime we have posted signs of “adverse reactions” stemming from a debt induced economical breakdown.  Below is just one of many examples of how debt affects us all.

LOS ANGELES TIMES: “Supreme Court orders California to release tens of thousands of prison inmates”

The 5-4 decision represents one of the largest prison release orders in U.S. history. The court majority says overcrowding has caused ‘suffering and death.’ In a sharp dissent, Justice Antonin Scalia warns ‘terrible things are sure to happen.

He said the high court had repeatedly overruled the 9th Circuit Court of Appeals for ordering the release of individual prisoners. Now, he said, the majority were ordering the release of “46,000 happy-go-lucky felons.” He added that “terrible things are sure to happen as a consequence of this outrageous order.” Justice Clarence Thomas agreed with him

California is just one of the many states willing to leverage the release of felons to prove more revenue, more taxes, is mandatory even willing to jeopardize the safety of citizens. The Prospector

NEWS WORTHY:

The Street: “Gold, Silver Prices Shine as Safe Haven”

NEW YORK (TheStreet ) — Gold and silver prices were shinning as safe haven assets Tuesday as European debt worries plagued investor sentiment.

Gold for June delivery was adding $6.40 to $1,521.80 an ounce at the Comex division of the New York Mercantile Exchange. The gold price has traded as high as $1,523.50 and as low as $1,513.20. The spot gold price was up $6.10, according to Kitco’s gold index.

Silver prices were adding 96 cents to $35.87 an ounce. The U.S. dollar index was shedding 0.29% to $75.92 which was helping the metals as they became cheaper to buy in other currencies.

MINEWEB : “Chinese citizens turn to gold in one of greatest booms in metal’s history”

For the first time, the demand for gold in China was so strong during the first quarter it outpaced the combined total of the developed West. If you lump together the gold demand of the U.S., France, Germany, Italy, Switzerland, the U.K. and other European countries, the sum of these countries is still outpaced by China. That’s despite triple-digit increases in demand from France, Germany and Switzerland.

FAIR PRICES IN GOLD & SILVER (10:00 am MDT)

  • ONE OUNCE SILVER BULLION:               $41.11

  • ONE OUNCE SILVER ROUND:                   $38.45

  • ONE OUNCE GOLD BULLION:                   $1602

  • ONE OUNCE GOLD BAR:                             $1564

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CONFISCATABLE GOLD, NONCONFISCATABLE GOLD

BUYING GOLD/SILVER, GOLD & SILVER   1 comment

At least once a week someone brings up gold confiscation and with no wonder since this is exactly what President Franklin Roosevelt did back in 1933.  If you want to send a chill of panic into a gold holder bring up the possibility of our federal government calling in physical gold.  As unlikely as it may seem my guess is confiscation seemed unlikely to gold holders in 1933, but it certainly happened. The call to surrender gold in exchange for Federal Reserve notes, dollars, surely took most by surprise.  What you may not know is FDR gave holders around three weeks to deliver or face fines or jail time.  Today we look closely into gold confiscation.

Feel free to read the Gold Confiscation Order right here. We must realize The Great Depression was at peak level with thousands of private banks in collapse long before banks were “insured” by the federal government.  The run on banks brought about government fear with some officials fearing a gold run possibly causing an export of gold to other countries.  Let me paint a 1933 picture here.  Real estate in major decline, stocks in major decline, banks failing, and the only value of wealth still standing is gold.  My question for you is how close would we be, right now, if the federal government hadn’t bailed out banks, corporations, and investment firms back in 2008?  It is now very clear, in 1933, the government confiscated gold because gold was the only source of wealth still standing and could not afford to have it leave the U.S.

If you read The Prospector Site you know I’m not a big rare coin advocate. My reasoning is that most do not understand numismatic, heck most can’t even say it, or rare coins enough to safely buy at fair market value.  I would rather see new buyers of gold stick with bullion or rounds that can easily be bought slightly over spot, but.  The “but” is the only gold possession allowed during the last confiscation was “rare and unusual coins.”  Many experts feel rare coins are the only physical gold not in danger of future confiscation if the situation comes to pass.  My opinion is rare coins are worth a good look as a hedge against confiscation by I do urge caution at time of purchase.

Another issue worth noting is many rare coins are as close to spot as they been in many years.  This is bad for those that paid hefty premiums in the past but great for those wanting to add a few just in case of confiscation.  If you care to know what the premium is just ask your broker, seller, what they would pay you for the same coin.  The difference just may surprise you, it certainly did me.  The fact is future confiscation could be entirely different from 1933 so trying to guess what desperate governments will do will only drive a person crazy.  Personally, the benefits of owning gold far out weigh the chance of confiscation.

NEWS WORTHY:

USA TODAY: “Ireland’s debt crisis, austerity offer a lesson for Obama”

Jobs have been jettisoned, salaries slashed, pensions and health benefits reduced. Unemployment hovers near 15%. The economy, which shrank 8% in 2009 and 1% in 2010, is barely back in the black — and the government is paying 5.8% interest on its bailout loans.

Ireland’s debt was about 25% of its economy before the housing and credit bust prompted the government to bail out the banks. Now it’s 112% and rising.

“This will be an important chance for the president to see what this has done, politically, socially and economically,” says Heather Conley, director of the Europe program at the Center for Strategic and International Studies. She cites the rise of nationalist, populist and anti-immigration groups.

FOX BUSINESS: ” Gold Rallies to Two-Week High on European Debt Concerns”

Further reasons to buy gold came in the form of doubts about Spanish austerity measures, an outlook downgrade to Italy’s credit rating and growing speculation about Greek debt restructuring.

However, holding gold in check is the higher dollar against the euro, which makes commodities priced in the U.S. currency more expensive for holders of other currencies.

THE GOLD REPORT: May 19, 2011

…..” that the Fed will move heaven and earth to prevent it and will even choose hyperinflation above deflation because it buys the Fed more time.”  Clive Maund when asked about debt-saturation.

“Silver could drop back to the high $20s before this Dollar rally is done and that should present a great buying opportunity, higher margin requirements or not. This is because inflation is expected to continue to build in the direction of hyperinflation, as QE is the only way out due to the massive debt and derivatives overhang.”  Clive Maund

FAIR PRICES IN GOLD & SILVER (8:00 am MDT)

  • ONE OUNCE SILVER BULLION:                 $39.87

  • ONE OUNCE SILVER ROUND:                     $37.22

  • ONE OUNCE GOLD BULLION:                     $1588

  • ONE OUNCE GOLD BAR:                               $1550


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WEEKLY WRAP

BUYING GOLD/SILVER   No comments yet

All week we have posted why gold and silver will climb, protect, and offer a stable source of real money only to those willing to trade dollars for metal.  Today we will feature article highlights as proof of failing attempts to stabilize economies by adding more debt and government interference.  World wide we are seeing the adverse reactions to massive debt and the question has to be how much longer will the middle class and down allow this?

MARKETWATCH: “Debt Fight Endangers U.S. Creditworthiness”

“Historically, the government’s deficits have been funded largely by foreign investors, to the tune of about 50% of all issuance. But recently a new buyer of U.S. debt has emerged: the Federal Reserve, which has committed to buying almost $1 trillion in debt (in addition to $1 trillion in mortgage-backed securities) and has quickly become the world’s largest holder of U.S. government bonds.”

msnbc.com news: “Spain Voting Begins Amid Mass Protests”

The elections are a key test of how much the party’s support has crumbled due to soaring unemployment and its handling of the financial crisis, and are seen as a prelude to general elections next year.

Tens of thousands of Spaniards demonstrated in the past week in city squares around the country against austerity measures that have kept a fiscal crisis at bay but aggravated the highest jobless rate in the European Union.

BLOOMBERG: “Egypt ‘Disintegrating’ as Economy Struggles”

“Right now, socially, we are disintegrating,” ElBaradei said on CNN’s “Fareed Zakaria GPS,” scheduled to air today. “Economically we are not in the best state. Politically it’s — it’s like a black hole. We do not know where we are heading

“People do not feel secure,” ElBaradei said. “They are buying guns” to protect themselves, he said.

REUTERS: “States Cut Money Sent to Cities, Counties”

(Reuters) – To balance their budgets, states are cutting funds they send to local governments, worrying many in the $2.9 trillion municipal bond market, from cities to rating agencies.

Investors are worried about the implications for the debt they hold, although Fitch noted some local governments have better credit scores than the states in which they are located.

REUTERS: “California Economy ‘On Mend’ Governor Wants Tax Hikes”

(Reuters) – California Governor Jerry Brown on Monday said the state’s economy was on the mend but that California still had a nearly $10 billion budget hole to close and insisted tax hikes were needed.

California, which if measured on its own would be the world’s eighth-largest economy, has struggled to recover from the housing slump and worst recession since the Great Depression. Its government has grown so indebted that financial markets fear it could damage the U.S. economy should its finances worsen.

msnbc.com: “Silver Prices Settle, but Sales Continue to Soar”

“For the average person, their silver and gold is one of the few things that has gone up,” says Phil Dreis, owner of the Antique Cupboard in Waukesha, Wis. “They’re facing the problem of more expensive food and gasoline, their wages haven’t gone up and a lot of sources of people’s wealth have disappeared. This is one of the few that’s been a success story.

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